Our Democratic Party controlled government is really into multi-tasking. We have a Secretary of State who likes to create “promotional toys’ like
reset overspend buttons, a President of the United States who fancies himself as a car salesman and a protector of the de-tonsiled masses, and now a Chairman of the House Banking Committee who wants the be Human Resources Director for the entire country. Barney Frank’s financial services committee passed a bill that would allow government to control finances of all financial companies not just those who have received funds from the U.S. government.
If that doesn’t scare you, it should. With each passing day our government is taking greater control of the private sector. Any way you slice it, that is called socialism.
Most American would prefer a bill to require congress to read bills before they vote on them, or to ban congress from getting sweetheart mortgage deals from congress, or even ban congress from having sexual relationships with people in the financial companies they regulate, like Barney Frank had with Herb Moses of Fannie Mae. I would go for those bills before what Frank passed today.
More on the Barney Frank bill below:
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The House Financial Services committee voted moments ago to ban pay practices at financial firms that encourage “inappropriate risk,” one of the government’s boldest moves into the private sector.
The vote by the committee, chaired by Rep. Barney Frank (D-Mass.), a vocal critic of what he has termed excessive corporate pay, now goes to the House for a vote on Friday.
Lawmakers in both parties said they were reacting to constituent pressure.
“Politically, it was very difficult for my members to stand up and fight this legislation,” said Rep. Spencer Bachus (R-Ala.), the committee’s top Republican, according to the Associated Press.
Wall Street and other financial firms pay their largest amount of compensation to executives in bonuses tied to performance — bringing in business to the company or structuring deals that reap huge fees for the company.
Frank and other Democrats — and some Republicans — have said the bonus structures have encouraged executives at the financial firms to create deals that were too risky that, if they collapse, could have wide ramifications on the economy as a whole. They point to the recent financial crisis, which was partly caused by over-leveraging and excessive risk-taking based on rising home values.
“You get hired for this very prestigious job and you get a salary, and now we have to give you extra money for you to do your job right?” asked Frank, the AP said.
The House package goes further than what President Obama seeks. Earlier this month, he sent Congress legislation that would let shareholders have a vote in executive compensation.
Of course, the term “excessive risk” is highly debatable and free-marketers chafe at government controls on how much a private company can pay its employees.
The legislation if passed would be highly invasive, said Tom Quaadman of the U.S. Chamber of Commerce, which has been fighting the limits on pay.
“It moves the government into the role of setting compensation policies for virtually every employee of all financial firms,” he said, according to the AP.
At the National Press Club on Monday, Frank repeated a line he’s been using on executive compensation for the past several months: “If the risk pays off, you make money. And if the risk doesn’t, you suffer no penalties. Heads you win, tails you break even. It’s like selling lottery tickets that only cost you money if they pay off.”
Some lawmakers favor forcing executives to give back bonuses if deals don’t work out.